(Adds analyst quotes, details on Fed decision, updates prices) * Canadian dollar ends at C$1.3107, or 76.30 U.S. cents * Loonie touches its strongest since Sept. 13 at $1.3101 * Bond prices mixed across the yield curve By Fergal Smith TORONTO, Sept 21 The Canadian dollar strengthened to a one-week high against its U.S. counterpart on Wednesday as oil rose and the Federal Reserve held off from raising interest rates. The Fed strongly signaled it could still tighten monetary policy by the end of this year as the U.S. labor market improved further. But officials estimated a more gradual pace of rate hikes as appropriate and cut their forecast for the economy's longer-run growth. "The Fed has resigned itself to a sluggish new normal and that's weighing on the U.S. dollar," said Adam Button, currency analyst at ForexLive. U.S. crude prices settled up $1.29 at $45.34 a barrel after a third surprise weekly drop in U.S. crude stockpiles helped assuage fears over a global oil glut. "Oil inventories have really tightened up and that can get the Canadian dollar off the floor in the short term," Button said. Oil is one of Canada's major exports. A decision by the Bank of Japan to target the yield curve added to support for risk-sensitive currencies such as the Canadian dollar as global stocks rallied. The Canadian dollar closed at C$1.3107 to the greenback, or 76.30 U.S. cents, much stronger than Tuesday's close of C$1.3209, or 75.71 U.S. cents. The currency's weakest level of the session was C$1.3240, while it touched its strongest since Sept. 13 at $1.3101. Gains for the loonie came after a speech on Tuesday by Bank of Canada Governor Stephen Poloz that suggested the central bank will remain on the sidelines even as the economy struggles to gain traction. In domestic data, the value of Canadian wholesale trade rose in July for the fourth consecutive month, posting a 0.3 percent gain on strength in the motor vehicle and parts subsector. Still, the Organisation for Economic Cooperation and Development has cut its 2016 growth forecast for Canada to just 1.2 percent, while it warned that global economic growth will flounder this year and next at rates not seen since the financial crisis. Canadian government bond prices were mixed across the yield curve, with the two-year bond down 1 Canadian cent to yield 0.576 percent and the benchmark 10-year rising 13 Canadian cents to yield 1.149 percent. Canada's trade minister and the EU trade chief sought to overcome the doubts of Austria and other EU members over a planned EU-Canada free trade deal, with a declaration spelling out the limits of the contentious pact. (Reporting by Fergal Smith; Editing by Paul Simao and James Dalgleish)

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